- The deal is the biggest such in all of gaming history
- The UK government’s regulator blocked the deal due to concerns over cloud gaming
- Both Microsoft and Activision Blizzard plan to reverse this on appeal
Another obstacle has been put in the way of Microsoft’s patch to acquiring Activision Blizzard, as a UK government regulator blocked the deal over concerns about the monopolization of cloud gaming.
UK Government Block Deal
Large companies acquiring and absorbing other large companies is nothing new in business and the gaming world. However, scale is important sometimes and Microsoft made history last year when it decided to purchase Activision Blizzard for a whopping $69 billion, making it the largest such transaction in all of gaming history.
Of course, trades like this take a lot of time, and for the past 14+ months, lawyers on both sides have been preparing the needed papers for the purchase. Microsoft has already completed most of the needed steps, but it seems the United Kingdom government is putting up a challenge to the completion of the historic deal.
In a post on Gov.uk, the country’s top competition regulator announced it is blocking Microsoft’s acquisition of Activision Blizzard. The governmental body explains its reasoning for this are concerns the purchase will result in a large hindrance of competition in cloud gaming, as Microsoft already controls a very large portion of that market.
“Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming),” the post reads.
“The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.”
While this may be true, Microsoft will do what it can to proceed with its goal of acquiring Activision Blizzard. Vice chair and president of Microsoft, Brad Smith, said that the company remains fully committed to the acquisition and will appeal the UK regulator’s decision. “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK,” he said (via Bloomberg). Activision Blizzard shares Microsoft’s dedication to finishing the deal, saying they would “work aggressively with Microsoft to reverse this on appeal.”
It’s unknown what this means for the broader deal, as well as franchises like Call of Duty and Overwatch. However, even if Microsoft agrees with the UK regulator, it will still have to do so for other ones. However, as the appeal has already been given, it seems the tech giant is once again entering a slew of legal battles.